The Insurance Industry has lobbied over the years
to see that there is no federal agency which oversees the insurance industry, essentially
leaving no federal law or enforcement to protect Insureds against Unfair Insurance Claims
Practices. Currently this authority lays at the state level only.

Some states laws allow (some don't) for judges to
award attorney's fees as well as punitive damages on behalf of the plaintiff suing an
Insurance Company in a bad-faith insurance matter (an Insurer's unreasonable withholding
of insurance policy benefits). The importance in having the threat of punitive
damages (in an amount sufficient enough to deter malicious, fraudulent or oppressive
conduct) being awarded in bad faith cases is enormous as it is the only financial
incentive for an Insurer to abide by fair dealing and acceptable good faith standards with
Insureds. In the absence of the threat of punitive damages, financially, an
Insurer is actually encouraged to engage in unfair claims practices.

The fact that each state has its own system for
overseeing insurance companies poses a great problem for policyholders particularly in
those states where recent legislative changes and court decisions favorable to the
insurance industry may encourage bad faith conduct. Victims of insurance
company unfair claims practices are badly in need of federal regulations that, if nothing
more, would at least establish a minimum single uniform national standard of Insurer
conduct.

In the absence of such a national standard, and
according to varying standards independently set by each state, Unfair Insurance Claim
Settlement Practices are generally defined as "if the Insurer knowingly commits
or performs with such frequency as to indicate a general business practice" according
to the following:

Failing to acknowledge and act with reasonable promptness upon communications with
respect to claims arising under insurance policies;

Failing to adopt and implement reasonable standards for the prompt investigation of
claims arising under insurance policies;

Refusing to pay claims without conducting a reasonable investigation based upon all
available information;

Failing to affirm or deny coverage of claims within a reasonable time after proof
of loss statements have been completed;

Not attempting in good faith to effectuate prompt, fair and equitable settlements
of claims in which liability has become reasonably clear;

Compelling insureds to institute litigation to recover amounts due under an
insurance policy by offering substantially less than the amounts ultimately recovered in
actions brought by such insureds;

Attempting to settle a claim for less than the amount to which a reasonable man
would have believed he was entitled by reference to written or printed advertising
material accompanying or made part of an application;

Attempting to settle claims on the basis of an application which was altered
without notice to, or knowledge or consent of the insured;

Making claims payments to insureds or beneficiaries not accompanied by statements
setting forth the coverage under which the payments are being made;

Making known to insureds or claimants a policy of appealing from arbitration awards
in favor of insureds or claimants for the purpose of compelling them to accept settlements
or compromises less than the amount awarded in arbitration;

Delaying the investigation or payment of claims by requiring an insured, claimant,
or the physician of either to submit a preliminary claim report and then requiring the
subsequent submission of formal proof of loss forms, both of which submissions contain
substantially the same information;

Failing to promptly settle claims, where liability has become reasonably clear,
under one portion of the insurance policy coverage in order to influence settlements under
other portions of the insurance policy coverage;

Failing to promptly provide a reasonable explanation of the basis in the insurance
policy in relation to the facts or applicable law for denial of a claim or for the offer
of a compromise settlement;

Using as a basis for cash settlement with a first party automobile insurance
claimant an amount which is less than the amount which the insurer would pay if repairs
were made unless such amount is agreed to by the insured or provided for by the insurance
policy.

Class Action

Class actions are a method for different persons
to combine lawsuits because the facts and the defendant are similar whereby these
individuals e.g. FBIC members of the proposed class, have similar claims and are by law
able to be joined together to prosecute their claims in a more efficient
manner. Class actions are designed to save Court time and allow one
judge to hear all the cases at the same time and to make one decision that is binding to
all parties.

In cases where money damages are sought, in
determining whether a class action is a fair and efficient method of settling the
controversy, the court will consider among other matters: whether the common questions of
law or fact prevail over any question affecting individual claims, whether the size of the
class will make handling of the claim arduous, whether the prosecution of separate claims
would create varying adjudication and inconsistent standards of action or diminish the
capacity of individual members to preserve their interests.

Courts will also consider whether the venue
selected is appropriate for litigation of claims of the particular class. In addition, the
court will examine the complexity of the issues, the expenses of separate litigation
claims and whether there are conflicts among the interests of the class members.

Courts will also generally consider whether the
attorneys for the class have experience in handling class actions and/or claims similar to
those of the proposed class and if the class will receive fair and adequate
representation.